Microsoft says China is gaining ground in the AI race outside the West

Microsoft warned that Chinese open-source AI models, supported by state subsidies, are expanding users outside the West, and its research highlighted rapid uptake of DeepSeek's models in parts of Africa and other countries.

Microsoft has warned that Chinese AI firms are gaining ground outside the West. Brad Smith, Microsoft's president, said Chinese open-source models and state subsidies are helping that expansion. Microsoft's research cites rapid adoption of DeepSeek's R1 model in parts of the global south. The company said the trend is a cause for concern because it could widen an existing economic divide. Key points: - Brad Smith said Chinese open-source models are competitive and often benefit from government subsidies that can lower prices compared with U.S. firms. - Microsoft's usage-based research reported DeepSeek market shares such as 18% in Ethiopia and 17% in Zimbabwe, and larger leads in countries where U.S. products are limited: 56% in Belarus, 49% in Cuba and 43% in Russia. - The research found AI adoption concentrated in developed countries, with nearly a quarter of the global north using AI in Q4 2025 versus 14% in the global south and 16% globally. - Smith said broader investment from international development banks, governments, financial institutions and private companies was needed to build data centres and support uptake. Summary: Microsoft said the pattern could deepen economic and technological divides between north and south. DeepSeek is expected to release a new AI model before the lunar new year holiday. Broader policy or investment responses are undetermined at this time.